From the Ifo Business Survey for January 2013

Credit Constraints Continue to Fall

Credit constraints for German trade and industry continued to fall by 0.8 percentage points in January. Only 20.3% of the companies surveyed reported a restrictive credit policy on the part of banks. Financing conditions were very favourable for German companies at the beginning of the New Year.

In manufacturing credit constraints dropped moderately by around 0.4 percent. The number of large and medium-sized companies experiencing credit constraints also fell slightly: 17.2% and 17.9% respectively cited credit constraints. The only increase was seen in the number of small firms experiencing credit constraints, which rose from 20.1% to 21.3%.

In construction credit constraints fell significantly by 1.5 percentage points and are now at 26.6%. For the first time since June 2012 the index in distribution fell below the 20% marker once again. 19.5% of the distribution firms surveyed reported restrictive access to banking credit.

Hans-Werner Sinn President of the Ifo Institute

Share of firms that indicated that credit access is restricted

01/12

02/12

03/12

04/12

05/12

06/12

07/12

08/12

09/12

10/12

11/12

12/12

01/13

Industry and Trade

22.8

21.1

20.3

19.5

19.6

19.9

21.2

21.2

20.7

21.3

21.6

21.1

20.3

Manufacturing Firms:

20.8

19.8

18.9

17.9

18.1

18.9

19.8

19.3

19.2

19.5

20.4

19.1

18.7

large

21.1

19.7

18.9

17.2

16.7

18.0

19.1

19.7

17.9

17.1

18.5

18.6

17.2

medium-sized

18.1

18.1

17.1

16.5

15.6

17.1

18.9

17.9

18.2

19.5

20.1

18.4

17.9

small

24.6

22.5

21.5

20.8

23.1

22.3

21.8

21.1

22.3

21.8

22.5

20.4

21.3

Construction

32.1

29.0

27.6

26.0

28.0

27.5

26.7

27.6

25.5

28.6

28.3

28.1

26.6

Trade

21.3

19.5

18.8

18.6

17.8

18.0

20.5

20.6

20.4

20.2

20.2

20.5

19.5

Source: Ifo Business Survey

Legend

The credit constraint indicator is based on ca. 4,000 responses of firms in industry and trade from the sectors manufacturing, construction, wholesaling and retailing. The firms are asked to respond to the following question: “How would you assess the current willingness of banks to extend credit to businesses”? The answers to choose from are “accommodating”, “normal” and “restrictive”. The credit constraint is calculated from the percentages of the responses to the last of the three categories. For the compilation of the credit constraint indicator for German industry and trade, the percentage shares from manufacturing, construction and retailing and wholesaling are weighted with the average credit volume of these sectors in 2005.